TPP, RCEP and the Race to Rule Trade in Asia Pacific

After almost a decade of painstaking negotiations, countries involved in the TransPacific Partnership Agreement (TPP) have signed the deal in February 2016. This trade deal represents 40% of the global GDP or 25.5% of the world’s total trade volume under the control of corporations through imposing stricter rules on intellectual property rights, state-owned companies, government procurement, and investment protection.

More than just being a trade deal, the TPP is an important component of the US scheme to maintain its hegemony in Asia Pacific. US President Barack Obama and State Secretary Hillary Clinton made it clear during the APEC Honolulu meeting in 2011 that the TPP serves as the economic arm of the US geopolitical strategy to maintain its political and economic influence in Asia Pacific by creating a region-wide legal regime that serves the interests of and is enforceable by the US and its corporations.[1]

Although the TPP still has to go through some processes including ratification at country level before being implemented, the completion of the TPP deal signals a vital step forward in the protracted US rebalancing in the Asia Pacific.

The Race to Rule Trade in APEC

The TPP was born out of the Asia Pacific Economic Cooperation (APEC) side meetings in 2005 between Brunei, Chile, Singapore, and New Zealand in an attempt to create a trade deal that will further liberalize trade and remove non-tariff barriers in the region. In 2008, the United States started its negotiations with the original TPP countries to join the trade deal. Since then, membership of the TPP expanded to include Australia, Canada, Japan, Malaysia, Mexico, Peru, and Vietnam.

In 2014, the APEC Business Advisory Council (ABAC) proposed the creation of the Free Trade Area of Asia Pacific (FTAAP) to implement WTO standards, as well as solve the complex, overlapping trade rules and standards in the region caused by the multiple FTAs that individual economies have signed. However, the FTAAP did not gain traction due to the reluctance of member economies to create a binding regional trade deal, and also because China and the US cannot agree on the rules and provisions. To move forward, the APEC 2010 conference released a communiqué to announce that the FTAAP will be pursued through building on the regional trade deals such as the TPP and its competitor, the China-led Regional Comprehensive Economic Partnership (RCEP). [2]

The opportunity to write the trade rules that will control almost half of the world trade and tap a mega region whose share in the global GDP is 57% provides further impetus for the US and its allies to pursue the TPP. During her speech at the seniors officials meeting of the APEC Forum in Washington in 2011, Clinton expressed that the TPP membership should “…grow to include all the APEC economies and that the TPP will provide a foundation for an eventual Free Trade Area of the Asia-Pacific (FTAAP).”[3]

China’s wish to counter the TPP and weaken US economic presence in the region is embodied in the RCEP. At first, China wanted an FTA only with the ASEAN, Japan, and South Korea. However, Japan which wanted to access the vast market of China but at the same time abate China’s influence in the region, advocated for the inclusion of India, Australia, and New Zealand, the last two being close US allies like Japan.

The size of RCEP is almost at par with the TPP. Together, its 16 members[4], which include two major economies in Asia, China and India, account for almost half of the world’s population, almost 30 per cent of global GDP and over a quarter of world exports.[5] It’s contents are almost similar to the TPP which includes trade in goods, services, investment, intellectual property, (including patents on medicines, copyright, geographic indicators, genetic resources, etc), competition, and dispute settlement except that observers claim that RCEP has less confidentiality requirements than the TPP.

The APEC Manila Economic Leaders Meeting in November is an important event for the supporters of the TPP to attract new members as well as to promote the trade deal to become the building blocks of the wider Free Trade Area of the Asia Pacific (FTAAP). With the TPP gaining the upper hand in the race to write the trade rules in the region, the RCEP negotiations started with a renewed urgency during its members’ meeting in Busan in October. Reports say the RCEP is expected to be signed during the November ASEAN summit in Malaysia, and to be enforced in 2016.

The Bandwagon Continues

Some weeks after the completion of the TPP, Asian countries have once again expressed their eagerness to join the trade deal. South Korea, Taiwan, and Thailand have all previously expressed their desire to be part of the TPP. After a previous announcement that the country will not join the TPP, Philippine President Aquino made a turnaround when he declared that the Philippines, is once again keen to join the trade deal as most of its allies are already part of it and believes that it would boost investment and jobs in the country. Joining the TPP means eliminating restrictions on foreign ownership, mandated by the country’s constitution.

After being initially silent about the TPP, President Joko Widodo of Indonesia has announced the desire to join the TPP too, adding to the list of countries wanting to join the trade deal.

Rewriting trade rules for whom?

Critiques have rightly pointed out that the megaregionals such as the TPP and RCEP enable the re-neocolonization of the region’s less developed countries and communities through FTAs and cementing corporate power. These agreements will funnel the region’s wealth and resources to the hands of the 1% controlling the corporations that will benefit from the greater trade liberalization and greater IPR protection and greater investment protections that will be awarded to them to the likes of Chevron, Abbott, Cargill, Kraft, etc.

The competition between China and the US for political and economic dominance in the region is fuelling existing tensions and militarism in the region. The conflict over the small island territories in the West Philippine Sea is being used by the US as pretense to increase its military presence in the region. The military buildup in the region is quite alarming. Aside from increased military presence from both the US and China, other countries in the region such as Australia, Singapore, and Japan are also beefing up their arsenal.

In this tug of war, the real concern for the people is not about which side should win. Neither the TPP nor the RCEP, neither the US nor China and their host of corporations can address the long standing people’s aspirations for trade that is just, fair, and responds to their needs.